Strategic Tariffs Stronger Us

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 As the world enters a new era of economic competition and geopolitical uncertainty, the United States faces a critical question.
Will it continue to rely on fragile international supply chains and outdated trade assumptions, or will it seize this moment to rebuild domestic strength?
President Donald Trump’s sweeping 2025 tariff agenda answers that question emphatically, and despite controversy, it’s the right move for America’s economic future and global leadership.
The latest analysis from The Tax Foundation’s 2025 Trade Policy Impact Report, one of the most respected non-partisan sources on tax and trade policy, outlines the far-reaching effects of these tariffs.
The findings show that while there are short-term costs, the strategic benefits far outweigh them, especially if the tariffs are implemented fully and allowed to reshape the foundations of US economic policy.
Transformational tariff strategy
Trump’s proposed tariffs include those under the International Emergency Economic Powers Act (IEEPA), targeting countries tied to fentanyl trafficking such as China, as well as broad national security tariffs on steel, aluminium, and auto imports from virtually all trading partners.
If enacted in full, these tariffs would raise the average effective tariff rate to 12.1 percent, the highest since 1941 and bring in nearly US$2.0 trillion (RM8.49 trillion) in federal revenue over the next decade on a conventional basis, or US$1.3 trillion dynamically after accounting for behavioural responses, according to The Tax Foundation.
Critics argue that these tariffs would reduce the US gross domestic product (GDP) by 0.8 percent, but this figure lacks historical context.
The same critics failed to object when decades of offshoring and unfair trade led to the closure of tens of thousands of US factories and the loss of millions of middle-class jobs.
A temporary GDP adjustment is a small price to pay to rebuild the country’s industrial base and regain control over strategic supply chains.
Reclaiming economic sovereignty
Without the IEEPA tariffs, which were ruled illegal by the US Court of International Trade in May 2025 and are now at risk of permanent injunction, the tariff package would be far less impactful.
The effective tariff rate would instead rise to only 4.4 percent, and revenue raised over the next decade would drop by US$1.4 trillion, down to just US$532.8 billion.
The strategic value of the IEEPA tariffs cannot be overstated. They target fentanyl-related imports, confront China’s aggressive trade behaviour, and send a clear message that the US will defend itself economically as well as militarily.
In 2025, The Tax Foundation reports that the full tariffs would increase federal tax revenues by US$152.7 billion, or 0.49 percent of GDP, making it the largest tax increase since 1993, and significantly larger than any tax hike enacted during the Barack Obama administration.
By contrast, without the IEEPA tariffs, the revenue increase falls to just US$36.4 billion, placing it outside the top 20 tax increases in modern US history.
These are not abstract numbers; they represent the difference between bold economic leadership and business-as-usual passivity.
Tariffs as tool of global strategy
Tariffs are not just economic tools; they are strategic levers of geopolitical influence. In response to US actions, China, the EU, and Canada have imposed retaliatory tariffs on US$330 billion in American exports.
The Tax Foundation estimates this could reduce US GDP by 0.2 percent and cut revenue by US$132 billion. Yet, these costs highlight the power of tariffs to pressure adversaries and rebalance trade.
Trump’s “reciprocal” tariffs 125 percent on Chinese goods and 50 percent on European Union imports aim to counter nations that exploit open US markets while protecting their own.
As of mid-May 2025, the average US tariff on Chinese imports reached 51.1 percent, covering nearly all goods levels rivalling the 2018–2020 trade war.
Additionally, EU exports now face a 20 percent duty, up from 10 percent earlier in April, as part of a broader effort to restore trade fairness.
For decades, US producers have faced steeper barriers abroad than foreign competitors have faced here. These new tariffs correct that imbalance, incentivise domestic production, and reduce dependence on nations that do not share America’s interests or values.
Industrial revival and household investment
The economic impact of tariffs on American households is real but manageable. In 2025, the average household is expected to face a tax increase of US$1,155, rising to US$1,397 in 2026.
However, if the IEEPA-based tariffs are blocked, these figures drop sharply to just US$275 in 2025 and US$358 in 2026.
While these costs are not insignificant, they are modest compared to the long-term benefits: revitalised domestic manufacturing, enhanced national security, and the return of good-paying jobs to communities that have long been overlooked.
Importantly, these household estimates do not capture the broader economic gains, such as stronger supply chain resilience, increased consumer choice over time, and reduced vulnerability to global disruptions like pandemics or geopolitical conflicts.
As The Tax Foundation points out, the current projections understate the full cost of inaction, as they omit the hidden toll of lost consumer options and price instability caused by foreign supply shocks.
US’ role as world’s leading power
Perhaps most critically, these tariffs are a reaffirmation of American leadership. For decades, the US has financed the rise of rivals by importing their subsidised goods while hollowing out its own economy.
China’s weaponisation of trade, control over rare earth minerals, and role in the fentanyl epidemic show that economic engagement alone will not induce reform.
Tariffs, when used strategically, impose consequences and create leverage that soft diplomacy cannot.
America cannot remain the unipolar leader of the global order while depending on adversaries for its industrial backbone.
A country that cannot manufacture its own steel, semiconductors, or medical supplies cannot lead in war or peace. The 2025 tariffs represent a decisive step toward reversing that dependency.
Strength over complacency
The Tax Foundation’s comprehensive report underscores a pivotal truth: the tariffs enacted under Trump, particularly those leveraging the IEEPA, mark the most significant transformation in US trade policy in a generation.
These measures are not rooted in outdated protectionism; they are a strategic defence of American workers, industries, and national sovereignty.
Yes, legal battles, political opposition, and economic adjustments are inevitable. But the alternative is far more costly: continued industrial decline, strategic dependence, and diminished global influence.
Now is the moment to reaffirm American strength. These tariffs are not an end; they are a beginning. A down payment on a future where the US reclaims control over its economic destiny.
If America is to lead in the 21st century, it must first secure the foundations of its independence and resilience. - Mkini
R PANEIR SELVAM is the principal consultant of Arunachala Research & Consultancy Sdn Bhd, a think tank specialising in strategic national and geopolitical matters.
The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.

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